Deductions Allowed in Income Tax Return Lodgement

The ATO is centred around helping citizens get their deductions right, but at the same time they’re watchful for warnings that distinguish individuals who are doing the wrong thing. Here’s a list of deductions you usually can’t claim on your tax return.

  • Travel between home and work – which is generally considered private travel.
  • Car expenses – unless you are transporting bulky tools or equipment
  • Car expenses – that have been salary sacrificed.
  • Meal expenses – unless you were required to work away from home overnight.
  • Private travel – including any personal travel portion of work-related travel.
  • Everyday clothes – you bought to wear to work
  • The cost of laundering eligible work clothes – unless you can show how you calculated the cost.
  • Higher Education Loan Program – contributions charged through the HELP scheme.
  • Self-education expenses – where there is no direct connection to your current employment.
  • Phone or internet expenses – that relate to private use.
  • Tools and equipment that cost more than $300 – however, you can depreciate the cost over a number of years.

For more information on Etax, myTax ATO, myGov and online tax return, please contact us at 1300 768 284 or you can email us at enquiry@taxrefundonspot.com.au

 

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State and Territory Payroll Tax Obligations

Payroll tax is a tax on the wages paid by employers. Employers are likely for payroll tax when their total Australian wages exceed a certain level called the ‘exemption threshold’. Exemption thresholds vary between states and territories.

The payroll tax obligations for not-for-profit organizations are the same as for businesses, except in certain situation.

Payroll tax should not be confused with the pay as you go (PAYG) withholding structure. Payroll tax is payable to the related state or territory by an employer, based on the total wages paid to all employees. Wages include salary, allowances, super contributions, fringe benefits, shares and options and certain contractor payments.

Some organizations may be exempt from payroll tax provided specific circumstances are satisfied. These organizations may include religious institutions, public benevolent institutions, public or not-for-profit hospitals, not-for-profit non-government schools and charitable organizations.

For more information on Etax, myTax ATO and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

Difference between employees and contractors

An employee works in your business and is part of your business, whereas a contractor is running their own business.

The following table outlines the differences between employees and contractors based on the six factors which need to be considered when determining whether a worker is an employee or contractor.

EmployeeCharacteristics of an employee include the following. ContractorCharacteristics of a contractor include the following.
Ability to sub-contract/delegate: the worker cannot sub-contract/delegate the work – they cannot pay someone else to do the work. Ability to sub-contract/delegate: the worker is free to sub-contract/delegate the work – they can pay someone else to do the work.
Basis of payment: the worker is paid

  • for the time worked
  • a price per item or activity
  • a commission.

 

Basis of payment: the worker is paid for a result achieved based on the quote they provided.
Equipment, tools and other assets:

  • your business provides all or most of the equipment, tools and other assets required to complete the work, or
  • the worker provides all or most of the equipment, tools and other assets required to complete the work, but your business provides them with an allowance or reimburses them for the cost of the equipment, tools and other assets.

 

Equipment, tools and other assets:

  • the worker provides all or most of the equipment, tools and other assets required to complete the work
  • the worker does not receive an allowance or reimbursement for the cost of this equipment, tools and other assets.

 

Commercial risks: the worker takes no commercial risks. Your business is legally responsible for the work performed by the worker and liable for the cost of rectifying any defect in the work. Commercial risks: the worker takes commercial risks, with the worker being legally responsible for their work and liable for the cost of rectifying any defect in their work.
Control over the work: your business has the right to direct the way in which the worker performs their work. Control over the work: the worker has freedom in the way the work is done subject to the specific terms in any contract or agreement.
Independence: the worker is not operating independently from your business. They work within and are considered part of your business. Independence: the worker is operating their own business independently from your business. The worker performs services as specified in their contract or agreement and is free to accept or refuse additional work.

For more information on Etax, Mytax and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

 

Check if workers are employees or contractors

It’s important to check whether your workers are employees or contractors, as your tax, super and other government obligations are different depending on whether the working arrangement is employment or contracting.

If you get it wrong and fail to meet your obligations, you risk having to pay penalties and charges.

Engaging a new worker

Before you enter into a work agreement or contract with a worker, you need to check whether the arrangement you’re planning to enter is one of employment or contracting.

You should check every time you engage a new worker, unless the working arrangement is identical to that of another worker which you’ve already checked.

Unless it’s exactly the same working arrangement, including the specific terms and conditions under which the work is performed, there could be a different outcome in relation to whether the worker is an employee or contractor. Minor variations in working arrangements can result in different outcomes.

If you have not checked for existing workers

If you’ve previously engaged a worker without checking our information about whether the arrangement is employment or contracting, you should review your earlier decision now to make sure you got it right.

For example, if you made the decision to treat your worker as a contractor because they have an Australian business number (ABN) or specialist skills or you only need them during busy periods, you need to review this earlier decision now. None of these things will make a worker a contractor. They may instead be an employee.

If you’ve engaged a worker incorrectly (such as engaging them as a contractor when they are an employee) you’ll need to meet the correct tax and super obligations for the worker from their start date, not just from when you identified the mistake.

For more information on Etax, Mytax and online tax return, please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au